On Cartels and Beers

Some days ago we anticipated that we would comment on the latest cartel Judgment issued by the General Court in Case T-235/07, Koninklijke Grolsch v Commission in relation to the Dutch Beer Cartel, which was sanctioned by the Commission back in 2007. When we announced that we would comment on it we hadn´t yet read the Judgment but rather the Court´s press release about it, but the notice about the annulment of a Commission´s decision is something that always turns us on attracts our interest).

Those interested in an objective summary of the relevant facts and of the GC´s reasoning can read the Court´s Press Release. Those interested on some not objective opinions can keep on reading:

In our opinion, the annulment of the decision as regards Grolsch is, in a sense, quite logical: that is what happens when you conflate distinct legal entities into one (a temptation too often seen in EU competiton law) and distinct infringements into one single and continuous infringement (also quite usual) and then mix it all together. But there are two interesting aspects of the case that are worth commenting.

One is the manner in which the GC dismisses the validity of the evidence concerning the parent´s company possible participation in the infringement: After noting that the majority of the evidence put forward by the Commission related in reality to the participation of Grolsch´s subsidiary, the Court was left with a couple of evidentiary items that could be used to support the accusation against the parent company (see recital 61 of the Judgment). The GC however dismisses those elements in an interesting manner (in recitals 62-71 of the Judgment). In essence, the GC decomposes the elements of the single and continuous infringement into three, and, departing from the Commission´s summary description of each of those components, it attempts to check whether the evidence can fit into any of them (this is an interesting, and welcome, deconstruction exercise that I´d never seen before regarding “single and continuous infringements). The GC then underlines that some of the evidence (documents found at Heineken relating to telephone conversations with one of the parent company´s employees) did not fit into the description provided by the Commission and therefore dismissed it. The Court was then left with one piece of evidence (notes taken at a meeting by that same employee of the parent company), but this evidence was also considered insufficient on the basis of another interesting reasoning (see recitals 65-66). In essence, the GC´s stance is that a complex concertation necessarily involves regular contacts throughout a long period of time, and that a single element cannot prove the participation of one company over the whole of this period. Does this imply a raise in the evidentiary standard for complex and long infringements?

The other aspect worth mentioning is the Commission´s lapsus (probably due to a certain overconfidence) , that has cost the EU budget 31.66 million euros. As it is clear from the Judgment, the participation of Grolsch´s subsidiary in the infringement was clear and there was enough evidence to prove it. If the Commission had addressed the decision to both the parent company and the subsidiary (as it normally does, and as it did in this case with regard to all other groups of companies involved) the sanction would´ve been upheld. Ooops.

According to one of our favorite sources: beveragedaily.com, the Commission is pondering whether to appeal the Judgment before the ECJ.

More on cartels and beers:

On 10-13 October the International Competition Network will be holding a Cartel Workshop in Bruges (Nicolas is attending, and I wouldn´t mind accompanying him if someone at DG COMP considers me -when I wear my blogger hat- as a stakeholder and kindly sends an invitation…). If any of our readers is attending the conference, I will now disclose one of Bruge´s most precious secrets: the most amazing beer that I´ve ever had can only be found in Bruges at a place called DeGarre.

This is a traditional place for students of the College of Europe (because, you know, there are so many other things to do in Bruges…). Luis Ortiz Blanco also traditionally invites the students attending his seminar at the College for some beers at the end of the academic year. You really shouldn´t miss it.

PS. And speaking about the ICN´s Workshop, we very much recommend you to check out their blog at www.icnblog.org . It really is a great source of information on international antitrust.